- The Washington Times - Tuesday, October 15, 2002

Bills that would make members of the federal military family somewhat richer and a whole lot happier are alive and not so well. They are in the political version of critical but stable condition.
At issue are bills that would let age 50-plus federal/military investors make hefty catch-up contributions to their 401(k) plans, give a health premium tax break to federal retirees and modify the formulas that eat into or eat up Social Security benefits due federal workers and other public employees.
But nothing is likely to be approved until Congress returns for an after-election, before-Thanksgiving minisession.
Lobbyists say the pro-fed bill most likely to succeed is the House-passed plan by Rep. Constance A. Morella, Maryland Republican. It would let federal and military personnel who are 50 and older make catch-up contributions to the Thrift Savings Plan, their 401(k).
Under the proposal, introduced in the Senate by Hawaii Democrat Daniel K. Akaka, fiftysomething TSP participants could do what their counterparts in the private sector already can: Contribute an extra $2,000, tax-deferred, to their 401(k) accounts next year. That amount would rise to $5,000 by the year 2006 and apply thereafter to any federal or military investor once they turn 50.
Less likely for approval this year: A bill that would give federal retirees the same perk called "premium conversion" which is already available to federal workers. This provides them the option to pay health insurance premiums using pretax dollars.
That would lower their tax bite from $200 to $500 a year, helping many retirees offset higher premiums or allowing them to buy better coverage. Most private companies allow the pretax benefit for workers (but not retirees), but it will take an act of Congress to extend it to retired feds.
Also likely sidelined until next year are bills that would repeal (not likely) or modify (more realistic) the so-called Social Security windfall and offset laws. Under the windfall formula, the earned Social Security benefit of a retired civil servant, teacher or other public employee can be reduced (up to $270 per month) if they didn't spend 30 years in a Social Security-covered job.
Most didn't, or won't. The proposed change would exempt part of their monthly Social Security and Civil Service benefit from any windfall cutback.
Modifying the so-called offset formula would do the same thing for a different group: Retired feds who are counting on a spousal (or survivor) Social Security benefit from their private-sector spouses.
Whereas windfall reduced the earned Social Security benefit of retired feds, offset usually wipes out the unearned Social Security spousal/survivor benefit.
The Morella and Akaka catch-up bills have wide bipartisan congressional support and full White House backing. In fact, the White House hoped the bill would pass before the November elections to help Mrs. Morella in her close but critical race with Democrat Christopher Van Hollen.
Modification of the offset and windfall formulas probably could have made it this year as part of an appropriations package. The problem: Congress didn't approve any of them, which is why the government is running on a continuing resolution. But the lobbying this year will carry over in 2003.
Premium conversion for retirees is an equity issue, up to a point. Working feds (and private-sector employees) have the option; retirees don't. That's partly because premium conversion can be done only via payroll deduction.
But many members of Congress believe it would require a change in the tax code and that private-sector retirees would demand the same break. That, in turn, would cut into tax revenues, although it could have taxpayer savings by encouraging or enabling more retirees to obtain health insurance.
Uncle Sam can help…really
Could the government, or some private company, owe your grandmother or your uncle a pension? Do you know where to get lists of nursing homes, federal benefits or child care services?
If not, check this out: The government has expanded its one-stop online service to help people track down programs, benefits and entitlements that may be due them.
What you need is a computer or a friend who knows how to use the Internet and some time. To check it out, go to www.govbenefits.gov.


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